Privately released reports on Wednesday highlighted the economic challenges facing Barack Obama a day after he won the race for the White House and foreshadowed weakness in the government's U.S. labor market report due out. Private employers made their deepest job cuts in six years last month and companies' planned layoffs surged to their highest in nearly five years.

NEW YORK (Reuters) - The private sector jobs market deteriorated rapidly in October while the service sector contracted sharply as the worst financial crisis in 80 years hammered the world's largest economy.

Privately released reports on Wednesday highlighted the economic challenges facing Barack Obama a day after he won the race for the White House and foreshadowed weakness in the government's U.S. labor market report due out on Friday.

Private employers made their deepest job cuts in six years last month and companies' planned layoffs surged to their highest in nearly five years. A key gauge of the service sector fell to the lowest since the index was launched in 1997.

"In short, horrible, but only to be expected in the wake of the equity plunge and the subsequent collapse in confidence," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

On Wall Street, stocks .DJI pared losses as the data did not show a collapse in the index that some had feared, but the dollar trimmed its gains against the euro. Prices of U.S. government bonds, which usually benefit from signs of economic weakness, pared gains.

The service sector accounts for about 80 percent of U.S. economic activity. The Institute for Supply Management said its non-manufacturing index came in at 44.4 versus 50.2 in September, below the level of 50 that separates expansion from contraction and worse than economists' expectations for 47.5.

The report displayed weakness all around, with employment falling to its lowest on record and new orders tumbling.